Housing price drop may threaten China growth

Housing prices fell in the majority of China’s largest cities last week, according to data released on a weekly basis, The Wall Street Journal reported. The residential price decline indicates that government efforts to rein in property markets during the last two years is succeeding, but it also raised the spectre that housing prices could fall too far too fast and hurt overall economic growth. Analysts estimate that up to 25% of China’s GDP is tied to the real estate market. Chinese officials are so far committed to maintaining current restrictions on property purchases and lending; in a speech on Sunday in Russia, Premier Wen Jiabao said Beijing would not waiver in its property-tightening measures. The drop in city-by-city data followed a 0.23% month-on-month decrease in prices in October. JP Morgan analysts predict that housing prices nationally could fall 5-10% in the next 12 to 18 months. Meanwhile, property consultancy Jones Lang LaSalle reported that third-quarter office rents in the Asia-Pacific region rose 10.5%, double the global rate, with China leading growth, Bloomberg reported.